A series of recent stories highlight the economic costs states like
Oklahoma and Arizona are facing as they implement anti-immigrant
legislation.


Lost Tax Revenue and Job Shortages in Oklahoma:  Oklahoma’s state Treasurer, Scott Meacham reported
that a recent drop in sales tax revenue (4.6% below expected totals)
could be explained by the apparent exodus of thousands of Hispanics due
to fear of HB 1804, the
controversial immigration law known as one of the strictest in the
country. Advocates (and opponents) should note the Treasurer’s
acknowledgment that the thousands fleeing the state results in less sales tax collected on
essentials like food, clothing and supplies. In preparing HB 1804, an
Oklahoma House study found that undocumented immigrants contributed
about $21 million a year in tax collections — about $11 million in
income tax and about $10 million in sales tax. 

Meacham also reported hearing that there are
“labor supply issues” in the agricultural, energy and construction
sectors in parts of the state, stating that landscape contractors were
having difficulty hiring employees, even when offering jobs at $15 an
hour (about twice the minimum wage). Oklahoma contractor, Jack Gray,
head of Standard Roofing Co. Inc. said “We will be in the worst depression Oklahoma’s ever seen if this bill stays in effect.” 
He reports that his company is offering good paying jobs, but cannot
bid for future business due to the lack of workers caused by HB 1804.

Other negative economic effects of HB 1804 include lowering apartment values and sales by raising the cost of doing business. 
Brokers and managers say that with the loss of many Hispanic workers,
documented or undocumented, due to fear of HB 1804, there have been
higher labor costs or labor shortages when it comes to roofing or
maintaining buildings. They warn that with the investment property
market usually setting prices based on income streams, any rise in
operation costs are taken seriously. 

Shrinking Arizona’s Economy: In Arizona, HB 2779
won’t go into effect until January 1st, but that hasn’t stopped it from
already having a negative impact on Arizona’s economy. HB 2779 is
shaping up to be one of the strictest anti-immigrant laws in the
country, encouraging people to contact a county sheriff’s or county
attorney’s office to report businesses they suspect of employing an
illegal immigrant. As the
Wall Street Journal
reported last week, Arizona businesses have been outspoken opponents of
the law since before it was signed by the Governor Napolitano in July
of this year. Says the president of the Arizona Chamber of Commerce and
Industry, Glenn Hamer: “It’s crystal-clear that the employer sanctions
law will harm the state economy. It’s simply a question of degree.”

Hamer’s statement is backed up by a recent study by the University of Arizona’s Udall Center
that concluded that economic output would drop 8.2% annually if
non-citizen foreign-born workers were removed from the labor force.
Two-thirds of Arizona’s foreign-born workforce is estimated to be
working in the state without legal authorization.

Judith Gans, the author of the University of Arizona study, told the
Wall Street Journal
that, “Getting rid of these workers means we are deciding as a matter
of policy to shrink our economy. They’re filling vital gaps in our
labor force.”

Ironically, the shortage of workers in Arizona has
helped drive at least one company to outsource work to Mexico. Sheridan
Bailey, the president of steel-beam manufacturer Ironco, has he’s
signed a deal to outsource some of his business’ production to a
Mexican company in order to cope with Arizona’s now tight labor market.
Bailey told the
Wall Street Journal that, “This law has the potential of sinking a business.” 
HB 2779 may also stall business growth. Arizona’s biggest franchisee
and grandson of the founder of Carl’s Jr. fast-food restaurants, Jason
Levecke, has put on hold plans to open 20 more outlets statewide, stating that, “That’s $30 million that could blow up in my face. The risk is too great.”

The Udall Center study cited in the
Wall Street Journal, Immigrants in Arizona: Fiscal and Economic Impacts,
found that the fiscal cost of immigrants to Arizona in 2004 was an
estimated $1.4 billion.  However, tax revenues attributable to
immigrants as workers were approximately $2.4 billion.  The net fiscal
gain for Arizona from immigration then is approximately $940 million. 
These numbers don’t distinguish between documented and undocumented
workers, but then there are reports that immigrants authorized to work
are leaving Arizona due to fear and discrimination arising from HB 2779.

More Resources:

The Oklahoman – “Fear may cause revenue drop, treasurer says”

Oklahoma HB 1804

The Oklahoman – “Arguments heat up over new immigration law”

The Oklahoman – “Immigration law may raise business costs”

Arizona HB 2779

Wall Street Journal – “Arizona Squeeze On Immigration Angers Business”

Udall Center for Studies in Public Policy, University of Arizona – Immigrants in Arizona: Fiscal and Economic Impacts